Dar suspends order aimed at tax evaders

Source:  Dawn.com Published in Business & Economy on Wednesday, May 21, 2014

ISLAMABAD: Apparently succumbing to pressure from powerful lobbies, Finance Minister Ishaq Dar has suspended the implementation of an order meant for recovery of tax from evaders.

Last week, the Federal Board of Revenue (FBR) issued SRO 351, granting power of assessment and recovery to officials of the tax intelligence unit of the Inland Revenue Service (IRS), to unearth and recover the evaded tax from fraudsters.

“The FBR issued the SRO without my approval and was unfair in its spirit,” Finance Minister Dar told representatives of the chambers of trade and industry and exporters and importers, who were not happy with the grant of additional powers to tax officials.

These stakeholders were attending a Tax Advisory Council meeting headed by the minister to discuss proposals for the upcoming budget at the FBR headquarters here on Saturday.

Mr Dar added that all “discriminatory SROs” would be abolished within three years and all the stakeholders were working together in this regard, an official statement said.

In the past 10 months (July-April), the intelligence unit has unearthed cases involving tax evasion of Rs6 billion. These cases were referred to the regional tax offices and large taxpayers units (LTUs) for recovery from the evaders.

So far only Rs800 million has been recovered from evaders, reflecting poor compliance of the tax department.

It is because of the poor performance of the field formations that the FBR has granted the power of assessment and recovery to its intelligence unit, according to analysts.

They say that recent tax evasion cases instituted by the unit against mobile phone sellers, software vendors, property developers, etc have irked the powerful lobbies.

The new powers were granted to ensure that the cases initiated by the intelligence unit were brought to a conclusion and revenue was collected and deposited in the government exchequer quickly.

The tax intelligence unit was created in March, 2011, despite strong opposition from within and outside the tax department. So far the unit has unearthed major scams of tax evasion from textile tycoons, cricketers, media persons and business elites.

A tax official said the SRO in question was drafted in a period of two months because of strong opposition from some top officials of the IRS, who were not willing to delegate the powers to the tax intelligence unit.

Ironically, the power of lodging FIR against tax evaders and searching their premises is available under the existing laws. The additional power was for early recovery of tax from evaders.

According to the official statement, Mr Dar underlined the need for formulation of realistic proposals aimed at ensuring growth in revenue generation, enabling the government to allocate appropriate amounts for development work and social safety net.

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Written by Mubarak Zeb Khan

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  • Muhammad Ishaq Dar Federal Minister for Finance, Revenue, Economic Affairs and Statistics